SAN JOSE, Calif., Oct. 22, 2015 /PRNewswire/ -- Altera Corporation (NASDAQ: ALTR) today announced third quarter sales of $399.6 million, down 4 percent from the second quarter of 2015 and down 20 percent from the third quarter of 2014. Third quarter net income was $61.5 million, $0.20 per diluted share, compared with net income of $70.3 million, $0.23 per diluted share, in the second quarter of 2015 and $118.0 million, $0.38 per diluted share, in the third quarter of 2014.
Year-to-date cash flow from operating activities was $392.9 million. Altera's board of directors has declared a quarterly cash dividend of $0.18 per share, to be paid on December 1, 2015 to shareholders of record on November 10, 2015.
"Market conditions globally were quite varied this quarter as some vertical markets produced good growth while others were weak. In spite of these headwinds we saw double-digit new product growth plus continued strength in data center demand," said John Daane, president, chief executive officer, and chairman of the board.
Third Quarter Business Summary
The quarter's sequential sales decline reflects choppy conditions across the company's vertical markets. Telecom and Wireless sales grew as wireless equipment demand rebounded from the prior quarter. Industrial market weakness was the major contributor to a decline in sales in the Industrial Automation, Military & Auto vertical market. Networking, Computer & Storage sales grew, led by gains in computer and storage, as data center customers increasingly leverage the performance and low power benefits of Altera FPGAs. Gross margin was 66.5 percent, down from the second quarter, due to unfavorable changes in vertical market mix. Reduced merger-related expenses led to a sequential decline in the quarter's operating expenses. The company's tax rate was 21.4 percent, up from the prior quarter, largely the result of continuing adverse geographic mix and reduced acquisition-related costs in the quarter.
| SELECTED THIRD QUARTER RATIOS AND RELATED RESULTS |
||||||||
| ($ in thousands) |
September 25, 2015 |
June 26, 2015 |
||||||
| Current Ratio |
4:1 |
5:1 |
||||||
| Liabilities/Equity |
3:4 |
3:4 |
||||||
| Quarterly Operating Cash Flows |
$ |
167,018 |
$ |
89,220 |
||||
| TTM Return on Equity |
10 |
% |
12 |
% |
||||
| Quarterly Depreciation Expense |
$ |
12,183 |
$ |
11,985 |
||||
| Quarterly Capital Expenditures |
$ |
10,190 |
$ |
7,696 |
||||
| Inventory MSOH (1): Altera |
3.6 |
4.2 |
||||||
| Inventory MSOH (1): Distribution |
0.8 |
0.7 |
||||||
| Cash Conversion Cycle (Days) |
168 |
162 |
||||||
| Turns |
48 |
% |
46 |
% |
||||
| Book to Bill |
<1.0 |
<1.0 |
||||||
| Note (1): MSOH: Months Supply On Hand |
||||||||
| ALTERA CORPORATION |
||||||||||||||
| NET SALES SUMMARY |
||||||||||||||
| (Unaudited) |
||||||||||||||
| Three Months Ended |
Quarterly Growth Rate |
|||||||||||||
| September 25, |
June 26, |
September 26, |
Sequential |
Year- |
||||||||||
| Geography |
||||||||||||||
| Americas |
17 |
% |
20 |
% |
16 |
% |
(14) |
% |
(15) |
% |
||||
| Asia Pacific |
43 |
% |
41 |
% |
42 |
% |
(1) |
% |
(19) |
% |
||||
| EMEA |
29 |
% |
27 |
% |
29 |
% |
4 |
% |
(19) |
% |
||||
| Japan |
11 |
% |
12 |
% |
13 |
% |
(13) |
% |
(33) |
% |
||||
| Net Sales |
100 |
% |
100 |
% |
100 |
% |
(4) |
% |
(20) |
% |
||||
| Product Category |
||||||||||||||
| New |
62 |
% |
53 |
% |
56 |
% |
12 |
% |
(12) |
% |
||||
| Mainstream |
16 |
% |
23 |
% |
21 |
% |
(31) |
% |
(37) |
% |
||||
| Mature and Other |
22 |
% |
24 |
% |
23 |
% |
(11) |
% |
(23) |
% |
||||
| Net Sales |
100 |
% |
100 |
% |
100 |
% |
(4) |
% |
(20) |
% |
||||
| Vertical Market |
||||||||||||||
| Telecom & Wireless |
35 |
% |
31 |
% |
45 |
% |
11 |
% |
(37) |
% |
||||
| Industrial Automation, Military & Automotive |
24 |
% |
27 |
% |
21 |
% |
(14) |
% |
(6) |
% |
||||
| Networking, Computer & Storage |
21 |
% |
18 |
% |
16 |
% |
11 |
% |
1 |
% |
||||
| Other |
20 |
% |
24 |
% |
18 |
% |
(20) |
% |
(12) |
% |
||||
| Net Sales |
100 |
% |
100 |
% |
100 |
% |
(4) |
% |
(20) |
% |
||||
| FPGAs and CPLDs |
||||||||||||||
| FPGA |
84 |
% |
83 |
% |
85 |
% |
(2) |
% |
(21) |
% |
||||
| CPLD |
9 |
% |
11 |
% |
8 |
% |
(20) |
% |
(5) |
% |
||||
| Other Products |
7 |
% |
6 |
% |
7 |
% |
7 |
% |
(22) |
% |
||||
| Net Sales |
100 |
% |
100 |
% |
100 |
% |
(4) |
% |
(20) |
% |
||||
Product Category Description
Forward-Looking Statements
Statements in this press release that are not historical are "forward-looking statements" as the term is defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are generally written in the future tense and/or preceded by words such as "will," "expects," "anticipates," or other words that imply or predict a future state. Forward-looking statements include, but are not limited to, statements regarding data center application growth potential. Investors are cautioned that all forward-looking statements in this release involve risks and uncertainty that can cause actual results to differ materially from those currently anticipated due to a number of factors, including without limitation, changing global economic conditions and other risk factors discussed in documents filed by the company with the Securities and Exchange Commission (SEC) from time to time. Copies of Altera's SEC filings are posted on the company's website and are available from the company without charge. Forward-looking statements are made as of the date of this release, and, except as required by law, the company does not undertake an obligation to update its forward-looking statements to reflect future events or circumstances.
About Altera
Altera® programmable solutions enable designers of electronic systems to rapidly and cost effectively innovate, differentiate and win in their markets. Altera offers FPGA, SoC, CPLD products, and complementary technologies, such as power solutions, to provide high-value solutions to customers worldwide. Visit www.altera.com.
ALTERA, ARRIA, CYCLONE, ENPIRION, MAX, MEGACORE, NIOS, QUARTUS and STRATIX words and logos are trademarks of Altera Corporation and registered in the U.S. Patent and Trademark Office and in other countries. All other words and logos identified as trademarks or service marks are the property of their respective holders as described at www.altera.com/legal.
| ALTERA CORPORATION |
||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME |
||||||||||||||||||||
| (Unaudited) |
||||||||||||||||||||
| Three Months Ended |
Nine Months Ended |
|||||||||||||||||||
| (In thousands, except per share amounts) |
September 25, |
June 26, |
September 26, |
September 25, |
September 26, |
|||||||||||||||
| Net sales |
$ |
399,567 |
$ |
414,162 |
$ |
499,606 |
$ |
1,249,214 |
$ |
1,452,216 |
||||||||||
| Cost of sales |
133,667 |
126,590 |
166,019 |
416,520 |
480,279 |
|||||||||||||||
| Gross margin |
265,900 |
287,572 |
333,587 |
832,694 |
971,937 |
|||||||||||||||
| Operating expense |
||||||||||||||||||||
| Research and development expense |
100,481 |
105,345 |
112,078 |
309,057 |
310,856 |
|||||||||||||||
| Selling, general, and administrative expense |
74,745 |
75,011 |
77,724 |
220,262 |
231,205 |
|||||||||||||||
| Amortization of acquisition-related intangible assets |
2,491 |
2,427 |
2,465 |
7,382 |
7,394 |
|||||||||||||||
| Merger expenses |
10,421 |
18,458 |
— |
28,879 |
— |
|||||||||||||||
| Total operating expense |
188,138 |
201,241 |
192,267 |
565,580 |
549,455 |
|||||||||||||||
| Operating margin (2) |
77,762 |
86,331 |
141,320 |
267,114 |
422,482 |
|||||||||||||||
| Compensation (benefit)/expense — deferred compensation plan |
(4,468) |
2,732 |
(487) |
(1,709) |
4,093 |
|||||||||||||||
| Loss/(gain) on deferred compensation plan securities |
4,468 |
(2,732) |
487 |
1,709 |
(4,093) |
|||||||||||||||
| Interest income and other |
(9,590) |
(8,495) |
(4,558) |
(24,681) |
(18,362) |
|||||||||||||||
| Gain reclassified from other comprehensive income |
(1,644) |
(1,463) |
(59) |
(5,613) |
(150) |
|||||||||||||||
| Interest expense |
10,772 |
10,859 |
10,774 |
32,039 |
32,139 |
|||||||||||||||
| Income before income taxes |
78,224 |
85,430 |
135,163 |
265,369 |
408,855 |
|||||||||||||||
| Income tax expense |
16,706 |
15,091 |
17,154 |
38,660 |
47,328 |
|||||||||||||||
| Net income |
61,518 |
70,339 |
118,009 |
226,709 |
361,527 |
|||||||||||||||
| Other comprehensive income/(loss): |
||||||||||||||||||||
| Unrealized gain/(loss) on investments: |
||||||||||||||||||||
| Unrealized holding gain/(loss) on investments arising during period, net of tax of $190, ($460), ($6), ($228) and $41 |
13,058 |
(24,805) |
(4,929) |
5,038 |
22,102 |
|||||||||||||||
| Less: Reclassification adjustments for gain on investments included in net income, net of tax of ($1), $9, $11, $15 and $21 |
(1,644) |
(1,454) |
(48) |
(5,598) |
(129) |
|||||||||||||||
| Other comprehensive income/(loss) |
11,414 |
(26,259) |
(4,977) |
(560) |
21,973 |
|||||||||||||||
| Comprehensive income |
$ |
72,932 |
$ |
44,080 |
$ |
113,032 |
$ |
226,149 |
$ |
383,500 |
||||||||||
| Net income per share: |
||||||||||||||||||||
| Basic |
$ |
0.20 |
$ |
0.23 |
$ |
0.38 |
$ |
0.75 |
$ |
1.16 |
||||||||||
| Diluted |
$ |
0.20 |
$ |
0.23 |
$ |
0.38 |
$ |
0.74 |
$ |
1.15 |
||||||||||
| Shares used in computing per share amounts: |
||||||||||||||||||||
| Basic |
302,707 |
301,799 |
308,215 |
301,950 |
311,853 |
|||||||||||||||
| Diluted |
305,337 |
304,604 |
310,184 |
304,421 |
314,130 |
|||||||||||||||
| Dividends per common share |
$ |
0.18 |
$ |
0.18 |
$ |
0.18 |
$ |
0.54 |
$ |
0.48 |
||||||||||
| Tax rate |
21.4 |
% |
17.7 |
% |
12.7 |
% |
14.6 |
% |
11.6 |
% |
||||||||||
| % of Net sales: |
||||||||||||||||||||
| Gross margin |
66.5 |
% |
69.4 |
% |
66.8 |
% |
66.7 |
% |
66.9 |
% |
||||||||||
| Research and development (1) |
25.8 |
% |
26.0 |
% |
22.9 |
% |
25.3 |
% |
21.9 |
% |
||||||||||
| Selling, general, and administrative |
18.7 |
% |
18.1 |
% |
15.6 |
% |
17.6 |
% |
15.9 |
% |
||||||||||
| Operating margin(2) |
19.5 |
% |
20.8 |
% |
28.3 |
% |
21.4 |
% |
29.1 |
% |
||||||||||
| Net income |
15.4 |
% |
17.0 |
% |
23.6 |
% |
18.1 |
% |
24.9 |
% |
||||||||||
| Notes: |
||||||||||||||||||||
| (1) Research and development expense as a percentage of Net sales includes amortization of acquisition-related intangible assets.
(2) We define operating margin as gross margin less research and development expense, selling, general and administrative expense, amortization of acquisition-related intangible assets, and merger expenses, as presented above. This presentation differs from income from operations as defined by U.S. Generally Accepted Accounting Principles ("GAAP"), as it excludes the effect of compensation associated with the deferred compensation plan obligations. Since the effect of compensation associated with our deferred compensation plan obligations is offset by losses/(gains) from related securities, we believe this presentation provides a more meaningful representation of our ongoing operating performance. A reconciliation of operating margin to income from operations follows: |
||||||||||||||||||||
| Three Months Ended |
Nine Months Ended |
|||||||||||||||||||
| (In thousands, except per share amounts) |
September 25, |
June 26, |
September 26, |
September 25, |
September 26, |
|||||||||||||||
| Operating margin (non-GAAP) |
$ |
77,762 |
$ |
86,331 |
$ |
141,320 |
$ |
267,114 |
$ |
422,482 |
||||||||||
| Compensation (benefit)/ expense — deferred compensation plan |
(4,468) |
2,732 |
(487) |
(1,709) |
4,093 |
|||||||||||||||
| Income from operations (GAAP) |
$ |
82,230 |
$ |
83,599 |
$ |
141,807 |
$ |
268,823 |
$ |
418,389 |
||||||||||
| ALTERA CORPORATION |
||||||||
| CONSOLIDATED BALANCE SHEETS |
||||||||
| (Unaudited) |
||||||||
| (In thousands, except par value amount) |
September 25, |
December 31, |
||||||
| Assets |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ |
1,934,850 |
$ |
2,426,367 |
||||
| Short-term investments |
185,762 |
151,519 |
||||||
| Total cash, cash equivalents, and short-term investments |
2,120,612 |
2,577,886 |
||||||
| Accounts receivable, net |
444,107 |
377,964 |
||||||
| Inventories |
159,310 |
153,387 |
||||||
| Deferred income taxes — current |
60,210 |
56,048 |
||||||
| Deferred compensation plan — marketable securities |
57,781 |
69,367 |
||||||
| Deferred compensation plan — restricted cash equivalents |
17,166 |
14,412 |
||||||
| Other current assets |
50,718 |
39,479 |
||||||
| Total current assets |
2,909,904 |
3,288,543 |
||||||
| Property and equipment, net |
208,897 |
194,840 |
||||||
| Long-term investments |
2,504,693 |
1,942,343 |
||||||
| Deferred income taxes — non-current |
20,725 |
20,077 |
||||||
| Goodwill |
81,331 |
74,341 |
||||||
| Acquisition-related intangible assets, net |
66,989 |
72,291 |
||||||
| Other assets, net |
92,646 |
81,791 |
||||||
| Total assets |
$ |
5,885,185 |
$ |
5,674,226 |
||||
| Liabilities and stockholders' equity |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ |
41,520 |
$ |
49,140 |
||||
| Accrued liabilities |
47,523 |
28,384 |
||||||
| Accrued compensation and related liabilities |
74,113 |
69,837 |
||||||
| Deferred compensation plan obligations |
74,947 |
83,779 |
||||||
| Deferred income and allowances on sales to distributors |
439,504 |
344,168 |
||||||
| Total current liabilities |
677,607 |
575,308 |
||||||
| Income taxes payable — non-current |
352,433 |
313,447 |
||||||
| Long-term debt |
1,493,729 |
1,492,759 |
||||||
| Other non-current liabilities |
8,955 |
6,886 |
||||||
| Total liabilities |
2,532,724 |
2,388,400 |
||||||
| Stockholders' equity: |
||||||||
| Common stock: $.001 par value; 1,000,000 shares authorized; outstanding - 302,857 shares at September 25, 2015 and 302,430 shares at December 31, 2014 |
303 |
302 |
||||||
| Capital in excess of par value |
1,227,586 |
1,165,259 |
||||||
| Retained earnings |
2,115,487 |
2,110,620 |
||||||
| Accumulated other comprehensive income |
9,085 |
9,645 |
||||||
| Total stockholders' equity |
3,352,461 |
3,285,826 |
||||||
| Total liabilities and stockholders' equity |
$ |
5,885,185 |
$ |
5,674,226 |
||||
| ALTERA CORPORATION |
||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||
| (Unaudited, in thousands) |
||||||||
| Nine Months Ended |
||||||||
| (In thousands) |
September 25, |
September 26, |
||||||
| Cash Flows from Operating Activities: |
||||||||
| Net income |
$ |
226,709 |
$ |
361,527 |
||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
42,804 |
42,426 |
||||||
| Amortization of acquisition-related intangible assets |
7,382 |
7,394 |
||||||
| Amortization of debt discount and debt issuance costs |
2,337 |
2,337 |
||||||
| Stock-based compensation |
63,560 |
70,518 |
||||||
| Net gain on sale of available-for-sale securities |
(5,613) |
(150) |
||||||
| Amortization of investment discount/premium |
9,025 |
1,900 |
||||||
| Deferred income tax expense |
1,065 |
3,582 |
||||||
| Tax effect of employee stock plans |
3,352 |
7,434 |
||||||
| Excess tax benefit from employee stock plans |
(3,704) |
(4,719) |
||||||
| Changes in assets and liabilities, net of the effects of acquisition: |
||||||||
| Accounts receivable, net |
(66,143) |
76,324 |
||||||
| Inventories |
(5,923) |
(22,458) |
||||||
| Other assets |
(5,796) |
(3,002) |
||||||
| Accounts payable and other liabilities |
9,401 |
32,581 |
||||||
| Deferred income and allowances on sales to distributors |
95,336 |
(90,744) |
||||||
| Income taxes payable and receivable, net |
26,202 |
36,345 |
||||||
| Deferred compensation plan obligations |
(7,123) |
(5,858) |
||||||
| Net cash provided by operating activities |
392,871 |
515,437 |
||||||
| Cash Flows from Investing Activities: |
||||||||
| Purchases of property and equipment |
(52,243) |
(34,946) |
||||||
| Sales of deferred compensation plan securities, net |
7,123 |
5,858 |
||||||
| Purchases of available-for-sale securities |
(1,520,789) |
(276,867) |
||||||
| Proceeds from sale of available-for-sale securities |
804,163 |
79,424 |
||||||
| Proceeds from maturity of available-for-sale securities |
111,439 |
175,280 |
||||||
| Acquisition, net of cash acquired |
(4,000) |
— |
||||||
| Purchases of intangible assets |
(5,359) |
(1,269) |
||||||
| Purchases of other investments |
(2,000) |
(8,224) |
||||||
| Net cash used in investing activities |
(661,666) |
(60,744) |
||||||
| Cash Flows from Financing Activities: |
||||||||
| Proceeds from issuance of common stock through stock plans |
19,080 |
29,871 |
||||||
| Shares withheld for employee taxes |
(25,052) |
(20,852) |
||||||
| Payment of dividends to stockholders |
(162,947) |
(149,844) |
||||||
| Holdback payment for prior acquisition |
— |
(3,353) |
||||||
| Long-term debt and credit facility issuance costs |
— |
(1,321) |
||||||
| Repurchases of common stock |
(57,507) |
(502,986) |
||||||
| Excess tax benefit from employee stock plans |
3,704 |
4,719 |
||||||
| Net cash used in financing activities |
(222,722) |
(643,766) |
||||||
| Net decrease in cash and cash equivalents |
(491,517) |
(189,073) |
||||||
| Cash and cash equivalents at beginning of period |
2,426,367 |
2,869,158 |
||||||
| Cash and cash equivalents at end of period |
$ |
1,934,850 |
$ |
2,680,085 |
||||
| INVESTOR CONTACT |
MEDIA CONTACT |
||||
| Scott Wylie - Vice President |
Sue Martenson - Senior Manager |
||||
| Investor Relations |
Public Relations |
||||
| (408) 544-6996 |
(408) 544-8158 |
||||
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SOURCE Altera Corporation
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